Origin MD blasts solar schemes

Origin Energy managing director Grant King has attacked costly state-based subsidies for rooftop solar systems, blaming them for increasing household energy bills and muddying the arguments for introducing a price on carbon pollution.

Increases in household power bills are being driven primarily by investment in networks such as transmission and distribution infrastructure, but also because of state-based solar incentives, he said in an interview.

The increases in power prices are also feeding public perceptions that a privatised industry inevitably leads to higher charges.

Origin spent $3.25 billion on electricity retailing and generator trading contracts in the New South Wales government’s recent $5.3 billion power privatisation, becoming the country’s biggest power and gas retailer.

But Mr King says that privatisations have just led to “more appropriate" pricing to ensure long-term investment in supply after past periods of under-investment.

He expresses frustration at the “quick and easy solutions" such as solar schemes that were introduced just a few years ago and have cost more than some people thought.

“We have been subject as an industry to solutions that have not been well designed and have not necessarily been fact-based or knowledgably based on how the industry operates," he said.

New South Wales is among states that have had to rein in their generous subsidies to households that install solar power systems because of spiralling costs.

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The wrangling over the Gillard government’s carbon pricing plans was also affecting the ability of companies to commit to long-term supply contracts and the effectiveness of forward electricity markets, Mr King added.

Origin has long argued in favour of carbon trading as the most cost-effective way to reduce greenhouse gases.

Assessing the changes in the industry over the past year, Mr King also referred to the “significant transformation in prospects" for liquefied natural gas, partly because of the Japanese nuclear disaster.

“It’s almost bizarre to look back at things people were saying a year ago through today’s eyes," he said.

Origin and partner ConocoPhillips are due to give the final go-ahead for their Australia Pacific LNG project in Gladstone within months.